How to lead an SME

CFOs of modern-day SMEs often operate in fast-paced, technology-enabled, all-hands-on-deck, fluid environments, in which they’re expected to not only be exceptional finance bosses but lead on sustainability, transformation and strategy.

‘The business landscape is rapidly changing, and SMEs are well poised to succeed given smaller organisational structures making them nimble and adaptable,’ says Gabriel Tan FCCA, CEO of GUAVA in Singapore. ‘To capitalise on such opportunities, CFOs need to have good foresight, and an ability to make sense of changing market conditions and to identify opportunities that would enable the company to survive and thrive.

‘They ought to have a good business sense and broad experience of working in various markets and sectors so as to identify patterns that could be applied to any situation they encounter. A person with a keen sense of curiosity who’s always willing to learn will make a great asset to a company trying to navigate these changing times,’ says Tan.

Behave like an owner

The CFO of an SME also needs to behave like a business owner, says Bright Amisi FCCA, finance director at Solenta Aviation in South Africa. ‘In SMEs you work closely with everyone, from the owners and their families to all stakeholders and shareholders – you hear everything they say, so behave like an owner, not an employee.’

In addition, Amisi continues, CFOs should be able to speak the language of the owner, which in his case involves highly technical, aviation-related subject matter. ‘Finance is oxygen; it should just work, he says. ‘But there are a lot of pieces controlled by other people that I should know about, so if I see something I don’t think is sustainable, I can confidently say so.’

Strategic mindset

The small business CFO wants to be a trusted sounding board for their CEO to help them develop their own decision-making processes, says Matt Portt FCCA, founder of the Portt & Co accounting firm in the UK.

‘To do this well, they need to understand the specific challenges and opportunities relevant to that business. And to be able to do that, I believe they must have spent time in the strategic decision-making processes of those businesses.’

To avoid any nasty surprises, cashflow planning and strategic foresight are vital, says Amisi, for whom the aviation sector presents unique challenges. ‘It’s expensive and capital intensive. Everything can be running smoothly, then suddenly a plane is damaged on the ground, it can’t fly, and that’s a million dollars out the window,’ he says.

Having a strategic mindset will make it easier to spot problems at a distance, provide solutions quickly and execute smoothly, says Gareth Cowan, founder of Trace Recruitment. ‘You should be able to think strategically for every department within the business and make the right decisions at the right time,’ he says. ‘Having a long-term strategic plan that you, your CEO and managing director share is essential.’

Chicago-based Thomas Finn FCCA, CFO of CoachCare, says SME CFOs require ‘an ability to pivot fast from strategic to tactical to operational and back again; be a strategic thinker and tactical executor; know how to hire key people, not an army; have a low ego but an elevated level of self-belief; and show willingness to embrace a higher level of risk and change than at a bigger company’.

They also need to be early adopters of any technology that will support the business and improve their ability to operate. ‘A CFO today must be versatile and at home with emerging technologies – for example, blockchain, AI and an advanced native user of SME-ready tools like Excel,’ says Gabriel Low, managing director at tech company Theben Asia.

Smooth negotiators

All this means that CFOs need to be strong negotiators, with the confidence to fight for strategies, flag risks and convince often cost-concerned owners of the value of a fully engaged CFO and their team.

‘SME owners sometimes underappreciate and underutilise the role,’ says Low. ‘So, CFOs need to be brave; they need to be solid all-rounders and multitaskers who are hands-on in the business in order to be positively impactful. They need to be curious and able to sense business flows; they need to take on a wingman role and to not be perceived as an out-of-touch recorder of transactions.’

All of which requires being a strong communicator at all levels, says Finn. ‘CFOs need to be open and approachable to everyone, which becomes more important the smaller the company. This helps build trust and encourages people to think outside the box, and to not see a failure as a negative but as a learning experience.’

Paint a picture

Portt emphasises the importance of good communication. ‘Recent years have seen massive external pressures on businesses of all sizes; the term “crisis” has probably been used in many a meeting,’ he says. ‘A good CFO needs a calm temperament to ensure directors remain focused on the key data and that appropriate decisions are made at the right time.’

Keeping it simple can go a long way, too, says Cowan. ‘No one wants the CFO to over-complicate things. This can lead to “losing the room” and alienating colleagues who may start to undervalue what you do, so find a way of explaining complex issues simply. Use technology, automate where you can and streamline processes. The ability to paint a picture to those outside of finance is an essential skill for any CFO.’

Last but by no means least is integrity. ‘The CFO is the guarantor of the business’s financial health, both internally and externally, and people – and their families – rely on them for their financial wellbeing,’ says Cowan. ‘They need to be honest, to treat people well and to have full transparency in everything they do.’